Abenomics

Definition: Abenomics

A name assigned to an ambitious multi-year plan by Japan Prime Minister Shinzō Abe (2012) to get Japanese Economy back on track.

It had three parts to it:

• To print additional currency to the tune of 60-70 trillion Yen to make the Japanese Exports more attractive. The surplus liquidity in the system would also generate modest inflation that would counter years of deflation.

• To introduce new government spending schemes to slowly generate demand in the Economy.

• Reforms in the Japanese Government regulations to make the industries more effective and efficient. The most important part of this part was the ability to remove inefficient workers with ease from the company. This was a tough task in earlier times. The section also aimed to improve and modernize the Agriculture, Pharmaceutical Sector.

The quantum of purchase done by Japan is by far the largest in terms of percentage by GDP. The total value of the Assets owned by the Bank of Japan roughly is about 57%of the total GDP in the year 2014. During the implementation of the spending policies that have widened the debt of the government, Abe has tried to reduce the gap by increasing taxes like the consumption tax (from 5% to 10%).

Yen has fallen by up to a whopping 50% against the dollar. The exports have started showing signs of revival. These are early signs of a possible recovery for Japan.